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NEW: RIPEC, Senate Leaders Hope To Improve RI’s National Business Rankings

Tuesday, January 15, 2013


It seems that whenever a national ranking on business competitiveness and overall business climate comes out, Rhode Island always finds itself at or near the bottom nationally in every category.

What can be done to change that?

There may not be one easy answer, but if the State Senate and the Rhode Island Public Expenditure Council (RIPEC) have their way, the Ocean State will soon take steps to rectify the problem.

In a joint news conference today, President of the Senate M. Teresa Paiva Weed and RIPEC Executive Director John C. Simmons unveiled a report titled “Moving the Needle” that featured a list of recommendations that they feel will help Rhode Island climb its way out of the cellar in national studies and rankings of business.

The report reviewed the individual factors that often cause Rhode Island to rank poorly compared to other states and made recommendations to begin to improve the state’s overall business climate and, subsequently, the way it is viewed in future studies.

“This report offers substantial recommendations to change how Rhode Island is ranked in national business-competitiveness surveys,” Paiva Weed said. “The economy is the Senate’s priority, and will be the Senate’s focus this session.”

Paiva Weed says improving the business climate will take a collective effort from the Senate the RIPEC and must include input from the House of Representatives, the Governor and his administration as well as the non-profit sector, academia and the business community.

“Working together, we will make Rhode Island more attractive to entrepreneurs, improve our image within our state and outside our borders, and help companies that are here to grow and create jobs,” she said.

The pair also announced that the findings of the report will be the basis for major legislative initiatives this session, since the Senate “believes the General Assembly’s priority and focus at this time must be on the economy.”

“This benchmark is a huge development in understanding the factors driving or impeding Rhode Island’s growth agenda,” said Laurie White, president of the Greater Providence Chamber of Commerce. “The report is validation of the true link that exists between the legislative process and our ability to grow the jobs base. It is a monumental step forward in how we evaluate, prioritize and measure economic policy initiatives.”

“Moving the Needle” established benchmarks and statistical baselines based on current conditions in several areas:
the economy, workforce and education, transportation and infrastructure, cost of doing business, and quality of life and calls for an annual review of the state’s standing in each benchmark as a way to measure progress.


While Rhode Island fares well in certain economic categories, such as per-capita income, recent year-to-year state budget deficits, and per-capita real gross domestic product, the state’s unemployment rate is a huge negative on its overall standing and is the second-highest in the nation.

The report recommends that the state develop a written, long-term, consensus-based strategic economic development vision, reinvent its approach to economic development and enact a pair of programs called titled ‘Enhanced Jobs Match” and “Back to Work Rhode Island” which would identify and address skills gaps among job seekers and connect employers and the unemployed by enabling workers to continue to collect unemployment benefits while they receive on-the-job training for vacant positions.

In addition, the report says the state should review the feasibility of a statwide arts district and reauthorize a rargeted historic tax credit program.

Workforce and Education

Rhode Island ranks near the middle of the pack in math and science proficiency nationwide and, according to the report, has shown progress in recent years. The state also scores well when evaluated on other educational measures ranking states for working-age adults with at least a two year degree (13th overall) and states for working-age adults with a bachelor’s degree (11th overall).

The state does not perform so well when its cost of higher education is studied, however as Rhode Island is currently the 11th highest state in the nation in both tuition costs at a four-year college and tuition costs at two-year institutions.

The report recommends that the state promote and fund early childhood and full-day kindergarten programs, prioritize investment in higher education and monitor the impact that increasing the dropout age to 18 had in 2011.

In addition, the report says Rhode Island should focus on helping students who have attended some college classes but failed to obtain a degree get back to school and finish their requirements.

Transportation and Infrastructure

Rhode Island ranks well when evaluated on commute times, as the average commute of a drive in the state is 22.9 minutes, nearly a full three minutes less than the national average but, the report cautions, the average commute has increased in the state by three minutes since 1990.

RI also ranks as the third-best state in the nation in broadband adoption, as 81 percent of the market has speeds greater than 4 MBps, and fourth-best when looking at adoption of internet speeds above 10MBps.

“This is an important factor in a growing, knowledge and technology-based economy,” the report states.

The actual conditions of the state’s roads and bridges, however, leave room to be desired as only Hawaii and New Jersey have worse road conditions than the Ocean State and only three states have a higher percentage of structurally deficient bridges.

Recommendations in this category include maintaining an open an competitive telecommunications market, providing resourcing for monitoring systems to address transportation costs overruns, reinvesting savings from retiring transportation bond debt in maintaining and upgrading roads and bridges, monitoring how the transfer of two bridges to the RI Turnpike and Bridge Authority have worked out and ensuring that the business community had a hand in developing the state’s transportation plan.

In addition, the report says the state should review and enact recommendations from the Senate Commission on Sustainable Transportation program.

Cost of Doing Business

By far Rhode Island’s worst category overall, the state was in the bottom seven in the categories of business tax climate, regulatory burden, energy costs, and health insurance costs and scored well in just one subsection titled “access to venture capital,” where it ranked 18th nationally.

Rhode Island was ranked dead last by Forbes Magazine in the category of regulatory environment and received a number of poor rankings by the Tax Foundation in the category of unemployment taxes (50th overall), property taxes (46th overall) and corporate taxes (42nd overall).

Rhode Island also ranked poorly nationwide in energy costs, coming in 43rd overall, but was the second-best in New England behind only Maine in that category. The Ocean State also ranked as the fourth-highest state for the average private employer health insurance premiums in the country.

“Moving the Needle” suggests Rhode Island maintain its income tax reforms of 2010 and resist increases in broad-based taxes, review the corporate tax structure, reduce bureaucratic hurdles and monitor the implementation of recent reforms while working in cooperation with the Office of Regulatory Reform and convene a legislative commission to study singles state code uniformity, bringing consistency to the building, fire and elevator codes.

In addition, the report says the state should leverage federal healthcare reform as a tool to reduce overall health care system costs, work the new Office of Digital Excellence to ensure state websites are user friendly, professional and appealing and “analyze areas of need along Rhode Island’s capital continuum to ensure that there are not gaps among the various financing programs for stages along a businesses’ life cycle.”

Quality of Life

In the categories of crime and safety, and health and wellbeing, Rhode Island ranks well nationally. The state also fares well when measured for the percentage of people whose income falls below the federal poverty threshold.

The state struggles when compared to its New England counterparts, however, as only Maine currently has a higher poverty rate.

A troubling statistic, however, is how Rhode Island is perceived by those who live here. According to a recent study by Brown University, 61 percent of those responding feel the state is heading in the wrong direction.

Some of the recommendations listed by the report suggest the state should consider the recommendations of the Senate Youth Violence Task Force to “extend economic opportunities to at-risk youth, improve detention decisions and alternatives, and prevent crime”, support efforts to promote wellness incentives and increase the healthcare workforce and should address the ”benefits cliff” structure, where beneficiaries lose supports “at a pace that exceeds their rate of increased earnings.”

Lastly, the report says Rhode Island should support adult literacy programs and support private sector efforts to “re-brand” the state.

“Moving the needle begins with an honest assessment of what we do well and what we do poorly,” Paiva Weed said. “We are taking a frank and candid look at the factors that impact the state’s economy and laying the foundation for significant action, legislative and otherwise, to improve Rhode Island’s business climate.”

To see the full report, click here.


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